Oxford Visionaries will post news and analysis about legal issues and lawsuits against gas companies. These issues arise from hydrofracked gas drilling –fracking — nationwide.

Often these news items will also be posted on the Breaking News page.

 
May 2, 2013
From: The Oxford Visionaries, Oxford, NY
By Richard Lacey, Oxford Visionaries Webmaster www.oxfordvisionaries.org/breaking-news

Statement by Richard Lacey :

iThe Oxford Visionaries are encouraged by the long anticipated and unanimous decision by the New York Appeals Court to permit local governments to enact zoning laws to ban hydraulic fracturing, or fracking, within their borders. The Oxford Town Board can no longer ignore more than 1000 citizens who want them to void the pro-gas zoning law they enacted illegally in 2007.
The court affirmed the Constitutional principle of Home Rule. Supervisor Lawrence Wilcox’s board can no longer pass the buck. At the May 8 meeting the board must dump the pro-gas law. Only then can they engage in a good faith effort with the Village to create a joint Comprehensive Plan for the coming decades.
The Oxford Visionaries are working closely with fellow Oxonians to insure our youngsters are included in the planning of their future.

BACKGROUND:
APPEALS COURT: NY Towns Can Ban Fracking

 

ALBANY, NY—The New York State Appelate court declared unanimously on Thursday that local governments can ban hydraulic fracturing and shale-gas drilling – “fracking” — within their borders. The definitive ruling dealt a major defeat to a coalition of the natural gas industry companies and landowners who had sought to overturn local bans.
The court issued its ruling in favor of the Tompkins County town of Dryden and the Otsego County town of Middlefield. Both towns had passed zoning laws prohibiting natural-gas drilling. The rulings upheld decisions last year from a lower court.
Controversies around “home rule” have pitted the gas industry and lease-holding landowners against critics of fracking, the controversial technique of injecting millions of gallons of fresh water, sand and chemicals deep underground to fracture shale and release natural gas.
Advocates of fracking maintained that state law prohibits local bans, but the towns of Dryden and Middlefield argued that “home rule” should prevail. They contended that state law does not affect their ability to decide how best to design their local zoning laws.
The unanimous Dryden and Middlefield decisions, which cannot be further appealed, carry significant implications for Oxford Village and Town boards. In February, the Village of Oxford banned fracking operations within its borders. In 2007 the Oxford Town Board improperly enacted an ordinance permitting fracking. As of the April 2013 Board Meeting it intends to allow that illegal measure to stand rather than declare it null and void.

Greetings from CDOG March 26, 2013

LATEST POLL:
3/20/13: Quinnipiac University Poll: NYS Voters Oppose Gas Drilling [46-39%]: http://www.quinnipiac.edu/institutes-centers/polling-institute/new-york-state/release-detail?ReleaseID=1868

LAW SUIT ABOUT WATER WITHDRAWAL:Another case won!!
PAINTED POST: Judge halts Painted Post water sales(AP) The Sierra Club et al sued The Town of Painted Post et al for selling the town’s water for fracking in PA. Judge Kenneth Fisher ruled in the Sierra Club’s favor and issued his opinion 3/25/13: An injunction has been issued to stop the water withdrawals until a proper SEQRA review is completed and the water sale agreement and the lease have been voided. The judge agreed with us that a water sale is not a Type II action under SEQRA and that respondents improperly segmented their review. Read more here: http://www.r-cause.net/painted-post-water-suit.html

FOUR HOME RULE CASES HAVE WON IN THE LOWER NYS COURTS SO FAR. DRYDEN AND MIDDLEFIELD WERE APPEALED AND ADVANCED TO THE APPELLATE DIVISION:
DRYDEN & MIDDLEFIELD: You may recall the judges ruled in favor of home rule in both these cases. They were both appealed and on March 22 were heard by the Third Department of NY’s Appellate Division. Decision should be made in 6-8 weeks: http://www.pressconnects.com/article/20130321/NEWS01/303210042/Appeals-heard-Dryden-Middlefield-fracking-bans

AVON: 3/12/13: State Supreme Court Judge Robert Wiggins dismissed Lenape Resource’s case against the Town of Avon, in favor of Avon’s moratorium and home rule. Read more here: http://blog.shaleshockmedia.org/2013/03/19/avon-wins-4th-new-york-case-upholds-home-rule/

BINGHAMTON: Back in October the judge ruled in favor of Home Rule: http://tomwilber.blogspot.com/2012/10/court-rules-against-binghamton-fracking.html

Landowners seeking funds to sue New York State

The Joint Landowners Coalition of New York Is Accepting Donations For A Lawsuit Against New York State Donations are now being accepted by the Joint Landowners Coalition of New York for its lawsuit against New York State for a constitutional taking of our property rights under the United States and New York Constitutions. Donations for the lawsuit can be made payable to “Landowner Defense Fund” and mailed to JLCNY PO Box 2839 Binghamton, NY 13902 Attention: Landowner Defense Fund   The JLCNY is a 501(c)(6) non profit corporation. Contributions or gifts to the Landowner Defense Fund through the JLCNY are not tax deductible as charitable contributions. Lawsuit Goals The goals of this lawsuit are consistent with the goals of the JLCNY – to protect the constitutionally guaranteed rights of NY landowners and push the State closer to approving the SGEIS and permitting wells in the Marcellus and Utica shales. We believe that moving forward with natural gas development will bring the greatest financial benefit to all New Yorkers, have an immediate impact on climate change, clean our air, dramatically reduce health impacts from air pollution and will allow our nation to come closer to achieving energy independence. Funding The action will not be commenced until the JLCNY has received sufficient funding. We are also closely monitoring the two year moratorium bill passed by the New York State Assembly. We want to add this legislation to the lawsuit if it is passed by the Senate and signed by the Governor.   For strategic reasons, we will not announce our financial goals. However, we will need a large war chest to proceed with the litigation.  All of the funds donated for this effort will be administered by the JLCNY’s bank, Chemung Canal Trust Company (“CCTC”), in a non-interest bearing account. The JLCNY will deduct from the Landowner Defense Fund ongoing expenses incurred for the lawsuit including, but not limited to, fees and expenses for attorneys, experts, accountants and CCTC fund administration (“Lawsuit Expenses”).  Provided that donors have provided accurate identification and mailing information, a proportional share of donations remaining after deduction of the Lawsuit Expenses will be returned to the donors for any donations of $100 or more (* $103.50 or more for credit card donations) when the case is resolved. The balance of donations of less than $100 will be donated to the JLCNY general fund. For example, if a donation of $10,000 is made and the donor’s proportional share of expenses is $1,000, then $9,000 will be returned to the donor. If a donation of $99 is made and the donor’s proportional share of expenses is $50, the balance of $49 will be donated to the JLCNY general fund.  Multiple donations from a single donor will each be treated as a single donation so that a donation of $200 would be eligible for a return of a portion of the unused funds but a second donation of $99 by the same donor would not since it is less than $100.   If an appeal is necessary, it will be the beginning of a new fund raising stage. Funds remaining in the initial stage will be used for the appeal stage. If the funds in the initial stage have been substantially depleted, the JLCNY reserves the right to limit reimbursement after the case resolution to the donors making donations in the subsequent fund raising stages. Any appeals to a higher appellate court will commence a new fund raising stage. It is difficult to predict how the case will proceed and how long it will take. The DEC could approve the SGEIS and begin granting permits for HVHF prior to filing the complaint, soon after filing or after protracted litigation and discovery. The JLCNY is committed to proceeding with the lawsuit until the State authorizes HVHF permits or until a court gives us a ruling in our favor, whichever comes sooner. In addition to landowner support, financial support from other stake holders will be necessary.  The JLCNY is seeking support from other businesses and organizations that believe, as we do, that natural gas development in New York is crucial for our economy, our environment and our energy security. Why Not a Class Action? A number of people have asked whether this will be a class action or an action that will involve hundreds of landowners.  While we would like to include a large number of plaintiffs in the action, the economic reality is that numerous plaintiffs would make the action too costly to prosecute.  Each property will require experts to value the mineral rights and economic loss. We expect expert witness fees to be in excess of $100,000.00 with just a few plaintiffs in the action.  A large number of plaintiffs would cost millions of dollars in expert witness and attorneys’ fees. Circumstances Have Changed Landowners have been asking the JLCNY to commence this lawsuit for over two years. Until now, delay by itself was not enough to commence the claims. But, circumstances have changed. It is widely recognized that the SGEIS and the regulations have been completed.  The SGEIS was prepared to be released on or about Labor Day 2012.  The decision to further delay the release of the SGEIS was the Governor’s decision entirely based upon politics, not science.  New York started a new health review even though the Department of Health had already completed a 2012 health review and found that there were no health impacts from the process of hydraulic fracturing.  New York’s dysfunction was further exemplified by Ohio which completed its HVHF regulations in 8 months and Illinois which was able to draft HVHF legislation in just 14 months with collaboration among landowner, environmental and industry groups. Ideal Plaintiffs ·         The lawsuit will primarily focus on landowners who own only the sub-surface mineral rights – and do not own the surface.  The purpose of this strategy is to bring the best claims under existing law on takings in order to establish legal precedent. The owners of sub-surface oil and gas rights have no use for their property other than exploration and development of oil and gas. ·         We have also sought landowners who were under a lease where their company applied for a Marcellus or Utica Shale drilling permit but the company was unable to proceed because of the State’s actions. ·         We have focused our efforts on the core regions of the Marcellus and Utica shales where there is little or no activity in other formations.  The viability of the Herkimer, Oneida and Trenton Black River formations leave us open to arguments that the property has other economic values and can be drilled by conventional means, unlike the Marcellus and Utica shales. ·         We have sought properties in the Susquehanna River Basin as opposed to those in the Delaware River Basin.  For this first action, we do not want the DRBC’s failure to promulgate rules to be a defense to our lawsuit against the State. The Law The takings claims will be brought under the 5th Amendment of the U.S. Constitution and Article 1, § 7 of the New York State Constitution. The claims are predominantly controlled by the law in two cases: Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) and Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978). A “Lucas” taking is regulation that denies all economically beneficial or productive use of land. It is a per se taking where the determination is made without regard for the government’s justification. You must show a “complete elimination of value” or it does not qualify. Absent a permanent deprivation of all value of the property, a “Penn Central” taking is governed by a fact-specific balancing test considering the following: 1) the economic impact of the regulation; 2) the extent to which the regulation has interfered with reasonable investment-backed expectations; and 3) the character of the governmental action. Takings claims are difficult claims to make against the government.  A landowner who claims that land regulation has effected a taking of his property bears the heavy burden of overcoming the presumption of constitutionality that attaches to the regulation and of proving every element of the claim. We are evaluating many legal theories which could be alleged against the State in order to increase our opportunity for success. Those theories include, but not are limited to, temporary or de facto takings, equal protection, civil rights violations and declaratory judgment relief based upon the unconstitutionality of the State’s conduct. We have been speaking with national experts on the relevant law and the facts of our case. We intend to consult with these experts prior to filing our complaint, assuming sufficient funding has been received. Our national leaders agree that we must move forward with development of our natural resources. President Barack Obama “In the meantime, the natural-gas boom has led to cleaner power and greater energy independence. That’s why my administration will keep cutting red tape and speeding up new oil and gas permits.” . . . . “we produce more natural gas than ever before – and nearly everyone’s energy bill is lower because of it. And over the last four years, our emissions of the dangerous carbon pollution that threatens our planet have actually fallen.” President Barak Obama 2013 State of the Union Address Former Secretary of State Hillary Rodham Clinton “That means we are less reliant on imported energy, which strengthens our global political and economic standing and the world’s energy marketplace.” “So protecting our own energy security calls for us to make progress at home and abroad. And that requires American leadership.” Secretary of State Hillary Rodham Clinton, Energy Diplomacy in the 21st Century,Georgetown University, October 18, 2012 NYC Mayor Michael Bloomberg “It is up to the governor, but I personally have said we should be fracking, not in the watershed, but we should be fracking. … About 13,000 people get killed every year by the pollutants from coal-fired plants. … [Also, as] Boone alluded to, getting oil from outside this country is expensive and it transfers our wealth to people who are trying to destroy our lives. … Of all the things we can do, natural gas isn’t perfect, but it certainly looks like it can make this country energy-independent and reduce dramatically the pollutants going into the air,” NYC Mayor Michael Bloomberg,  SNL:New York should start fracking, say T. Boone Pickens, Michael Bloomberg, February 21, 2013, http://www.snl.com/InteractiveX/article.aspx?CDID=A-17037268-12588&KPLT=8 We truly hope our leaders in Albany will agree that it is time to move forward with natural gas development in New York.  But, until New York moves forward, the JLCNY is committed to protecting the constitutionally guaranteed rights of New York landowners. Our team of attorneys is dedicated to filing this lawsuit as soon as possible. If you have questions or comments about the lawsuit, please contact: Levene Gouldin & Thompson, LLP Attn: Scott R. Kurkoski, Esq. P. O. Box F-1706 Binghamton, NY 13902 607-584-5620 skurkoski@lgtlegal.com Questions or comments about fundraising should be directed to my attention at: Dan Fitzsimmons dfitzsimmons@stny.rr.com Dan Fitzsimmons, President Joint Landowners Coalition of New York, Inc.

 

OTHER NEWS:
3/23/13: New Fracking Standards Not Supported By Environmental Organizations: http://ecowatch.com/2013/new-fracking-standards/

3/20/13: Gas Industry Loses Fight to Keep Fracking Pollution Case Secret: http://ecowatch.com/2013/industry-loses-fight-fracking-secret/

3/20/13: Louisiana sink hole has expanded to 12 acres: http://grist.org/news/massive-louisiana-sinkhole-caused-by-oil-industry-just-keeps-on-growing/

THREE FINGER LAKES NEED YOUR HELP NOW!
HEMLOCK & CANADICE LAKES: We have until April 15 (tax day!) to submit comments about the DEC’s DRAFT UNIT MANAGEMENT PLAN. Please click to here to learn the problems with the Management Plan, read others’ comments, see maps and articles. Join the letter writing campaign party on April 7. http://www.r-cause.net/protect-hemlock–canadice-lakes.html

WATKINS GLEN: the Watkins Glen salt mine is being turned into an LPG storage site unless we make our voices heard loud and clear. URGENT!! Read Sandra Steingraber’s plea for comments today: http://us4.campaign-archive1.com/?u=9691e612c7b1b9a9a04bf1f41&id=f4972cbc10&e=56040e0db1

 

 

Chip Northrup (read his blog) on Dryden and Middlefield (posted 3/16/13) and a lengthy but highly readable series of commentaries Northrup posted on  3/26 analyzing the court’s response to arguments re: Middlefield.   The analyses of Dryden and of Middlefield follow:  

Note especially Nicole Dillingham’s summary conclusion, which we repeat here:

It is not possible to predict with any certainty how or when the Court will rule, but those familiar with appellate procedures estimate a decision should be expected in 4-8 weeks. Since the panel was composed of 4 judges, we are informed a 2/2 split would result in affirmance of the judgments below. Thus, the appellants need three judges to overturn the decisions. We remain hopeful, based on the excellent briefs and arguments presented, that the decision, when issued,will uphold home rule and the carefully reasoned decisions of the trial courts.

 

Why The DEC Didn’t Sue Dryden  …

Middlefield & Dryden Appeal Hearing – Commentary
March 26, 2013 | Filed under: Blog
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Observations of Nicole Dillingham on the Middlefield and Dryden case appeals. My comments or emphasis in bold:

As attorney for the first Appellant, the bankrupt Norse Energy Corporation, Tom West, argued first. He had a shaky start. He said that to make the capital commitments necessary for gas extraction the industry needed “certainty” with respect to regulations, not a patchwork of local rules. At this point he went so far as to urge the Court to “put yourself in the shoes of the operators.” This quickly led to an admonition from the Chief Judge that this was not the role of the Court. Standing in the shoes of one of the parties was perhaps his role, but not the Court’s, which was obligated to interpret and the law to all parties.

West is Chesapeake Energy’s lobbyist. It is not clear how much appellate work he does, but he was evidently treating the appellate panel of judges as if they were laymen in a jury. Since the original plaintiff dropped the case against the town after losing at trial, the bankrupt Norse Energy was brought in by the gas lobbyists – ie. West – to pursue the appeal.

Mr. West then turned to the claimed important State interests that encouraged gas drilling and by extension supported preemption of local laws. These included the importance of domestic energy production, avoidance of “waste” of energy resources, and even prevention of disruption of the energy markets. He said these interests were so important, they could only be advanced through State and DEC control of drilling operations unimpeded by local laws. (The Court later noted that these concerns are largely questions of public policy that are for the legislature, not the courts, to decide.)

An appellate court is largely focused on determining whether the trial court erred in matters of law or the facts of the case as presented at trial. None of West’s argument address whether the trial court misinterpreted case law or statutes. They address issues that a lobbyist would make to a legislator or a regulator, which is not surprising, since that is what West does for a living.

Regarding the notion of “waste.” In oil and gas law, “waste” is addressed by regulating how wells are drilled and produced – starting with optimal spacing unit sizes to prevent over-production, which can reduce the ultimate recovery of the pool. By definition, if a resource is not being depleted (because drilling is banned), it is not being “wasted.” The resource is still there – for future use – if and when the technology improves enough to make its production a less hazardous land use.

The Judges soon steered Mr. West to a discussion of the statutory construction of the preemption language in the Oil and Gas Law (ECL 2-303). The Court indicted that clearly the legislature could preempt local laws, but when they do so they must be “very clear”. As discussed in the briefs, ECL 2-303 provides that local laws related to the “regulation” of the industry are preempted; the only exceptions are for local laws concerning road use and property taxation. The issue before the Court is whether local zoning laws of general applicability should be considered “regulation” of gas drilling within the meaning of the preemption clause.

Interpretation of similar language in the context of the mining was discussed in the case of Frew Run. There, the Court of Appeals found that preemption of local “regulation” of the mining industry did not invalidate local zoning, because zoning was not a direct “regulation” of the mining industry. The Court asked Mr. West how mining differed from gas drilling? He responded that mining impacted surface land use more directly.

Actually no. A fully developed shale gas field has significantly greater surface impacts than most mines – including many strip mines – since shale gas industrialization is widely dispersed and interconnected via gathering systems, processing plants, compressors, service roads, etc. A textbook way to impact the greatest surface area possible.

Mr. West claimed that fracking has been practiced for decades in New York without incident, and that recent technological developments in hydraulic fracturing now made it more like brain surgery than mining.

The problem with HVHF shale gas wells is that they are significantly more intrusive than shallow vertical wells – of the sort found in New York State. Even though these wells are not without problems, the land use and environmental hazards of shale gas industrialization are two orders of magnitude greater. So much so that the State of New York has put an moratorium on shale gas industrialization, and has moved to protect the New York City reservoir watersheds, and specific aquifers from HVHF contamination. The industry is aware of how hazardous shale gas industrialization is – they have even set up a “Sustainable Shale Center” to address the problems.

The Court asked whether the key was to treat the term “regulation” in ECL 2-303 as concerned with the “how” of drilling, while zoning laws controlled the “where”, mirroring an argument made by attorneys for the Towns. At this point Tom West argued that regulation of the “where” of drilling must be interpreted to be included in the preemption clause to avoid waste, an express State interest. For example, he urged the Court to consider that well spacing, which concerned the “where” of drilling was clearly a matter for the DEC. The Court then asked whether State control of spacing units could be interpreted to be limited to areas where fracking was allowed by local zoning? Mr. West asked the Court “not to fall into the Frew Run trap”.

Three trial courts found that if an activity is prohibited, the it does not exist in the town. So the town is not “regulating” the activity. Because the town cannot “regulate” that which does not exist in the town – in this case, shale gas industrialization.

The Judges asked Mr. West several tough questions about the extent of the immunity from local regulation granted the industry under his interpretation of the law. The Judges asked incredulously whether it was his position that there was no local control whatsoever with respect to drilling, even near or under sensitive local sites, such as drilling under reservoirs? Also, the Judges asked: “Is it you position that that towns have absolutely no authority even as to drilling 24 hours per day?” Mr. West replied that all such regulation was for the DEC and that except for traffic and taxation, the Towns had no authority. He stated that if local noise regulations were violated it was up to the DEC, and only the DEC, to control it.

Note that by arguing that local nuisance ordinances do not apply to gas drilling, West is inadvertently making an argument for banning the activity entirely ! Why would a town allow an activity that none of its local laws apply to ? See below.

Tom West reiterated that the industry simply could not operate with a myriad of local laws. The Chief Judge then told Mr. West that she was concerned that on pg. 7 of his brief he went so far as to say that no prudent operator would ever invest in a state where it operations were subject to the “fickle” decisions of municipal boards. The Judge indicated concern that Mr. West would dismiss hard-working local Town Boards as “fickle”. Mr. West admitted it might have been a poor choice of words, but stated it was based on his own “real world experience”.

Home Rule is the norm in most oil and gas states/ And most cities, towns and some counties apply local laws to drilling. Some towns in Texas have drilling moratoriums. Some towns in Colorado ban drilling entirely. That’s the “real world” of land use laws.

Scott Kurkowski argued the case for Jennifer Huntington (Cooperstown Holstein, the appellate in the Middlefield case). He urged the court to consider that the Middlefield ordinance was overbroad because it would ban not only horizontal drilling, but also vertical wells, which Ms. Huntington was depicted as eager to profit from. He also maintained that there is a clear State interest to maximize gas extraction that should not be impaired by local laws, such as the Middlefield zoning law. In his view, the State’s goal to maximize energy extraction was clear, in the interest of all the people of New York, and not to be compromised by local government.

Like West, Kurkoski was making a largely political argument, not a legal one. Plus his argument is misleading: exporting shale gas overseas is not inherently in the public interest, nor is contaminating aquifers, etc.

He distinguished Frew Run and other cases under the Mined Land Reclamation Law as inapplicable because “we have never had a gravel crisis in our country.” He insisted that risk of another energy crisis required the State to take control of all laws which might affect gas extraction away from local government and that the only traffic and taxation, as specifically mentioned in ECL 2-303, were excluded from the preemption clause.

The Court asked Mr. Kurkowski why, if such broad preemption was intended, the legislature did not insert specific language preempting zoning laws in ECL 2-303, such as the examples cited by attorneys for Dryden at p. 24 of their brief. Mr. Kurkowski pressed that the statute was clear; the only exceptions for local control were road regulations and taxation. He then turned to reading legislative history into the record claiming the legislative history supported his view that broad preemption was intended. The Judges pointed out that legislative history is irrelevant if the law is clear on its face as Mr. Kurkowski claimed. The Court also politely pointed out that policy questions with respect to energy policy generally were not for the courts to decide; the job of the courts was to apply the law.

Like West, Kurkoski ignores the conclusions of the trial court: a town cannot be construed to “regulate” that which does not exist. If shale gas industrialization does not exist in a town, the town is not “regulating” shale gas industrialization. It is prohibiting it. “Regulate” and “prohibit” are not synonyms. In fact, legally they’re antonyms.

Alan Knauf, of Knauf Shaw LLP, representing Dryden Resources Awareness Coalition, commenced arguments in support of the Town of Dryden. Mr. Knauf began by stating that Frew Run was controlling and could not be distinguished. He was immediately interrupted by questions from the Court regarding the outer bounds of the claims being advanced by the industry. The Court focused on three questions. First, the Court asked whether even local noise regulations would be deemed “regulation” and therefore preempted. Mr. Knauf answered that “probably” they would be deemed regulations and would be preempted.

This is true. As worded, ECL simply becomes a de facto argument for a town to prohibit shale gas industrialization. Since once allowed, the town would have no ability to control the activity. Local noise ordinances (which apply to shale industrialization in other states) might not apply in New York. So the safe course for a New York town is to prohibit the activity.

Secondly, the Court again referenced the cases cited at page 24 of the Dryden brief indicating that “the legislature knows how to” preempt local zoning when it wants to do so. They noted, however, that clarifications were added to the Mining Law to protect local zoning after the Frew Run decision was decided, but that similar changes were not added to the Oil and Gas Law. Mr. Knauf emphasized that the plain language of the ECL 2-303 supports the Town’s position, that the ECL 2-303 is not ambiguous, and that legislative history is, therefore, irrelevant.

The “Home Rule” Bill has been dropped this legislative session for just that reason – if the courts rule in favor of the towns, there is no need to amend the law. Both the bill’s sponsors and the Governor have said as much.

Thirdly, the court turned to a discussion of the policy to avoid “waste” expressing concern that unless an economic process for the retrieval of gas could be implemented the resource might be wasted. Regarding the industry’s claimed need for contiguous spacing units to avoid waste, the Court asked how the industry would know where it could start and stop drilling? Similarly, the Court asked whether zoning, which is generally concerned with surface activities, extended to below ground impacts. The Court was interested in whether a town could control activities under its borders that originated from a neighboring town and how an operator would know where to stop if certain lands were not leased for drilling. The Court noted cemeteries, which involved subsurface activity, were subject to zoning, but was uncertain about how the zoning provisions in issue would be applied. Mr. Knauf stated that zoning laws probably did extend to below ground activities and that the gas remains trapped under ground and is not therefore wasted in any event.

Land use laws address land uses. Oil and gas regulations address subsurface uses – all of the spacing unit regulations in New York apply only to subterranean boundaries, mineral rights – not surface boundaries, land use rights.

If a resource remains in place, it is not “wasted” it is preserved for future use – when the methodology to tap it is safer. Improving the safety of the process is the avowed goal of the industry sponsored “Sustainable Shale” initiative.

Next, Deborah Goldberg of Earthjustice presented additional, compelling argument for the Town of Dryden. Immediately upon stepping to the podium and outlining her intended remarks, she too was interrupted by questions, many of which had been posed to other counsel. The Court first asked whether town-wide zoning was unique either in New York or other jurisdictions? Ms. Goldberg answered that under land use powers, it was in fact common to zone-out certain activities on a town-wide basis as the Town of Dryden had done here. It was a commonly utilized expression of local zoning power.

The Court then returned to questions about the legislature’s power to preempt, again citing page 24 of the Earthjustice brief, where examples of specific preemption clauses upheld by the courts were cited. Ms. Goldberg urged the Court to apply those cases and utilize standard principles of statutory construction to the issue of the preemption clause in ECL 2-303. She pointed out that the enacting clause of 2-303 dealt only with “regulation of an industry”; it did not reach “regulation of land use.” The exceptions clause, dealing with road use and taxation, must be read as limited to the scope of the enacting clause.

When asked about application of zoning laws to below ground activities, Ms. Goldberg conceded that the Dryden zoning law expressly regulated only surface activities, although zoning laws frequently regulated at least the near surface, such as burials. She explained that this is a unique feature of the Dryden law.

See above. By the same token, the DEC spacing unit regulations are silent on surface uses and surface boundaries. The DEC only addresses subterranean boundaries. Land use laws only address land use.

The Court then again asked if a town could be deprived of power to regulate even 24-hour noise and dust if it allows fracking? Ms. Goldberg indicated that towns generally have the right to regulate noise within their borders. However if fracking is allowed by local zoning, then certain powers like those to regulate noise may not be retained. (The question of the enforceability of local laws of general applicability such as noise restrictions was not in issue in the cases now before the Court; these cases concerned only the validity of a complete bans.)

The hypothetical of applying local noise ordinances is, as Nicole notes, not an issue in Middlefield or Dryden. Nor was it an issue in Avon, nor Binghamton.

Lastly, the court returned to the issue of potential of waste of the resource. Ms. Goldberg was asked if the highest and best use of the technology, to avoid waste, required contiguous extraction (spacing) units. Ms. Goldberg stated the concerns about waste must be tempered by concerns for the welfare of all citizens and that issues about waste only arise once extraction has been commenced, and only in zones where drilling is allowed.

Local land use ordinances apply to oil and gas in other states – in most places, zone by zone – because the protection of surface uses trumps the need to optimize the shape or number of spacing units – which are based on subterranean mineral rights – not surface rights. Note that, as a practical matter, the lose of some spacing units at the edge of an area where they are prohibited is trivial.

Lastly, John J. Henry, of Whiteman, Osterman and Hanna, stepped forward to represent the Town of Middlefield. Like all the other counsel, his argument was consumed by questions from the bench, which he ably handled. Initially, the Court asked if Mr. Henry agreed that lateral drilling from a town that allowed drilling would be allowed to intrude under a town that banned it? Mr. Henry thoughtfully noted that he could not at this time fully answer this question, as it was hypothetical and not presently before the Court.

Good answer.

He was also asked if he agreed that the exceptions in ECL 2-303 regarding road use and taxation could reasonably be considered “regulations” within the enabling clause of the statute. For example, the Court asked how taxation would be considered a regulation. Mr. Henry replied that the Court need not consider the exceptions. Appropriate statutory construction of ECL 2-303 started and ended with the enabling clause, which clearly stated that preemption applied only to “regulation of the industry”, not regulation of land use.

Good answer. Not an issue in any of the cases. Plus taxation of an activity that is prohibited is a bit hypothetical.

The Court went on to ask what if a “land use” regulation incidentally impacts the industry? Mr. Henry pointed out that this was an “implied pre-emption” argument that should be rejected in light of the express preemption language in the statute. And what if the industry needs a large geographic area in which to operate, asked one of the Judges? Mr. Henry responded by emphasizing that in order to preempt the traditional power of towns to exercise home rule to enact laws of general applicability, the legislature must be “explicit” and very clear. He stated the Frew Run decision cannot be distinguished and is controlling on the issues before this Court.

All true. How much land the industry needs to export gas to China is not the issue.

In conclusion, Tom West reserved a few minutes of time for rebuttal. He used this time to make three points. First, that the language of Frew Run is not identical to that of ECL 2-303 and that therefore it is not binding precedent.

Four trial courts have disagreed. The substance is identical and there is nothing in ECL 2 -303 to indicate otherwise.

Second, urging the Court to invalidate the zoning bans so as to protect the “correlative rights” of landowners who wish to profit from drilling.

West may be a gas lobbyist, but he misuses “correlative rights” here – the term is used to refer to mineral rights between (mineral rights) owners. The DEC’s spacing unit regulations do not refer to surface rights at all. There are no “correlative rights” of surface owners and surface land uses in the DEC’s HVHF regulation. What is at issue is protecting surface uses, the environment and the general public – not “correlative rights” between mineral rights owners.

Lastly, he offered rather weakly that perhaps the ECL 2-303 could have been written more clearly to expressly specify broad preemption, but that the Court must consider that the legislature may have had a “bad day” and the Court should find preemption nonetheless. The notion that the legislature simply had a bad day when writing ECL 2-303 was a novel last thought with which to end the argument.

Which is why West is a lobbyist that drafts industry-friendly legislation. Not an appeals court specialist.

It is not possible to predict with any certainty how or when the Court will rule, but those familiar with appellate procedures estimate a decision should be expected in 4-8 weeks. Since the panel was composed of 4 judges, we are informed a 2/2 split would result in affirmance of the judgments below. Thus, the appellants need three judges to overturn the decisions. We remain hopeful, based on the excellent briefs and arguments presented, that the decision, when issued,will uphold home rule and the carefully reasoned decisions of the trial courts.

Nicole Dillingham

March 23, 2013

 

 

 

No Fracking without Regulations  — HEALTH 

 

“If the DOH Public Health Review finds that the SGEIS has adequately addressed health concerns, and I adopt the SGEIS on that basis, DEC can accept and process high-volume hydraulic fracturing permit applications 10 days after issuance of the SGEIS. The regulations simply codify the program requirements.”

— DEC Commissioner Martens on 2/12/12

 

Can the DEC issue HVHF drilling permits without Regs?? NO FRACKING WAY!

Well, they can certainly try that approach, but the DEC seems to be forgetting that it is obligated to follow the law, abide by their own policies, and not act in an “arbitrary and capricious” fashion.

The DEC has already

1. declared in the 2009 SGEIS that new regulations would be issued,

2. actually proposed draft HVHF regulations,

3. declared in the 1992 GEIS that the gas drilling regulations (which haven’t been updated since) needed revision to conform to 1981 amendments to the gas drilling statute, and

4. has not made even the basic amendments to the regulations required by the 1992 SGEIS in order to bring the regulations up to 1988 standards.

The DEC does not have the authority to radically depart from the course of action it set out on, to act contrary to the DEC’s own policies and determinations, or in an unreasonable, arbitrary and capricious way. And it is unreasonable and without basis for the DEC to try to backtrack and issue HVHF gas drilling permits without first issuing proper and protective gas drilling regulations.

 CEDC is prepared to sue the DEC to stop any attempt by the DEC to issue HVHF gas drilling permits before comprehensive amendments to the DEC’s gas drilling program have been put in place.

 Without a finalized SGEIS, the DEC will not be able to meet the deadline for promulgating its proposed HVHF regulations. The DEC will have to start the rulemaking procedure from scratch (and with more comprehensive regulations). The DEC does not want to restart the rulemaking process – they’d rather just skip it.

 

If the DEC tries, as Commissioner Martens suggested it will, to issue HVHF permits without having adequate regulations in place, it will have bought itself at least one lawsuit – and one that we believe the DEC has little hope of winning.
No SGEIS for at least a “few more weeks”

The Commissioner of the Department of Health, Dr. Shah, wrote a letter to the Commissioner of the DEC, Joe Martens, on 2/12/12 and informed the DEC that the Department of Health’s review of the SGEIS would take a “few more weeks.”

Background

By way of background, the SGEIS is a supplemental environmental review of the Department of Mineral’s regulatory gas drilling program as it relates to “High Volume Hydraulic Fracturing.” This environmental review is mandated by a state law called the State Environmental Quality Review Act, or SEQRA.

The SGEIS for HVHF was ordered in 2008 by then Governor Patterson when a law was enacted that provided for 640 acre spacing units. Previously the standard “spacing unit” was 40 acres. The Governor ordered the supplement to the 1992 GEIS for gas drilling to address citizen concerns about new environmental impacts from horizontal drilling in bedrocks like the Marcellus shale.

The DEC released an initial draft of the SGEIS in 2009 and then a revised draft SGEIS in 2011. The public commented extensively on both drafts of the SGEIS, and many demanded that the DEC include a study on the impacts to public health in the SGEIS. This past September, the DEC requested that the Department of Health (DOH) review the health impact analysis included in the SGEIS (but the DEC would not agree to a full blown health impact assessment).

The DOH appointed three outside experts to assist with its review and the DEC had hoped that the DOH review would be complete by now.

However, on 2/12/12, the DOH reported that its review would not be completed for a “few weeks.”

 OK, so what does that mean?

The DEC cannot issue permits for HVHF gas drilling until the SGEIS is completed.

The SGEIS cannot be completed until the DOH reports back to the DEC. So there can be no HVHF gas drilling permits until after after the DOH reports back to the DEC.

In response to Dr. Shah’s letter, DEC’s Commissioner Martens stated that if the DOH find that the SGEIS adequately addresses public health impacts that the DEC will proceed to finalize the SGEIS and begin processing permits 10 days after that without having the HVHF regulations in place.

The DEC will miss the HVHF Regulation Deadline and the proposed HVHF Regs will Expire

The delay in the DOH review of the SGEIS means that the DEC will be unable to meet the deadline for finalizing the proposed HVHF regulations and they will expire. New regulations will require a new round of public hearings and comment.

 

Background

As explained above, the SGEIS is an environmental impact review and is required under a state law called SEQRA. The purpose of the environmental review is usually to identify potential impacts from an individual project, and is sometimes to review “generically” the environmental impacts from an entire regulatory program.

Separate and aside from that environmental review is the process of enacting REGULATIONS that govern the terms by which the DEC issues gas drilling permits. An environmental impact statement is not intended to act as a substitute for a regulatory program but is designed to inform (read: come BEFORE) and provide the scientific basis to determine what regulations are required to adequately protect the environment and public heath.

 

Back in 1992, the DEC appears to have properly understood the relationship between the 1992 GEIS and the traditional gas drilling regulations. The Findings Statement declared:

“The State’s oil, gas, solution mining and gas storage regulations have not been updated since 1982 and extensive regulatory revisions are needed. … One of the major purposes of this generic environmental impact statement is to present the framework, justification and recommendation for essential regulatory changes to these industries in New York State.” GEIS

So GEIS first and regulations second. And if the DEC were to proceed in a rational manner and if it followed its own determination, it would have updated and amended its gas drilling regulations after the 1992 GEIS was completed. And then when HVHF came to the scene, the DEC would complete a supplemental environmental review (the SGEIS), and then after determining the potential environmental impacts, adopted further new amendments to the gas drilling regulations to ensure protection of public health and the environment.

But the revised regulations that the 1992 GEIS proposed were never promulgated.

 

And the DEC has been trying to avoid enacting gas drilling regulations, having a preference to rely on “permit conditions” and relying on regulations that haven’t been substantially updated since 1972. SGEIS

It wasn’t too surprising that when the 2011 SGEIS was released, GONE was the language from the 2009 SGEIS that stated after the SGEIS process was complete, the DEC would “be in a position to rationally determine what additional measures or procedures should become fixed principles that would supplement or improve the Department’s existing regulatory framework”

In the fall of 2011, using the same comment period and public hearings used for the SGEIS, the DEC issued proposed draft HVHF regulations. And just as the DEC has to comply with the provisions of SEQRA in completing the SGEIS, the DEC must also follow New York State law in the process of adopting or amending the proposed HVHF regulations.

The law governing the regulatory process is called the State Administrative Procedures Act or “SAPA.” The purpose of SAPA is to guarantee “that the actions of administrative agencies conform with sound standards….It insures that equitable practices will be provided to meet the public interest.”

SAPA imposes specific time limits on the rulemaking process. Specifically, SAPA generally requires that all rules be adopted (or expire) within one year of the date of the last public hearing on the proposed rules. For the HVHF regulations, that deadline was November 29, 2012. The DEC was not able to meet this deadline. So the DEC invoked a provision of SAPA that allows for the one year deadline to be extended for another 90 days. (SAPA § 202(3))

 

OK, What Does This Mean?

This means that the proposed HVHF regulations need to adopted no later than February 27, 2013. But the HVHF regulations cannot be adopted until AFTER the DEC adopts the SGEIS. A step in “completing” the SGEIS is publishing a Notice of Completion of the SGEIS in the Environmental Notice Bulletin (ENB). No sooner than ten days after the Notice is published, but before taking any other action, the DEC must issue a written findings statement.

The February 13th deadline that has been looming large in the press, and on our minds, came from a combination of the publishing schedule of the ENB (Wednesdays) and the ten day “waiting period.” The Notice has to be submitted at least one week before it gets published. In order to get the Notice of Completion published 10 days prior to February 27th, the Notice would have to be submitted tomorrow. And the DOH has made it clear that that isn’t going to happen.

This means that the DEC will have to start over with the rulemaking process for the proposed HVHF regulations IF it promulgates the regulations.

 

 

NRDC Files Suit in Federal Court challenging Town gag rule

Jan 19, 2013 – A closely watched legal challenge to the sealing of a court-approved settlement between Marcellus Shale development companies and the Washington County family that claimed the industrial operations damaged their health moved a step closer to resolution Friday. “What the case is about is the right of privacy, and when a case is settled out of court not to have it publicized just because newspapers are curious,” said attorney Phillip Binotto Jr., of Eckert Seamans, who spoke on behalf of the drilling companies. Mr. Binotto said the companies “have a right to negotiate confidentiality agreements and we have the right to enforce those agreements.

“At one point in the hearing, Judge Seneca admonished the industry counsel for linking its confidentiality argument to the protection of the rights of the Hallowichs’ children. “What gives you the right or standing to assert the privacy rights of the minor children?” Judge Seneca asked Mr. Binotto. Deborah Goldberg, an attorney with Earthjustice, a New York-based environmental law organization, who sought to file a brief in support of opening the judicial record, said the settlement could contain important information about the impact of gas drilling operations on public health. Mr. Frank said, “I believe the judge will act expeditiously.”

>>>>>>><<<<<<<

Washington County judge questions former colleague’s handling of gas case

Jan 18, 2012 – Fallout from the actions of a former Washington County judge under state investigation spread on Friday, becoming the focus of a hearing in a high-profile natural gas industry case. Paul Pozonsky, who resigned last year amid a state investigation, did not follow normal procedure in a case pitting a Mt. Pleasant family against several gas companies, the new judge on that case said. Without mentioning Pozonsky by name, Common Pleas President Judge Debbie O‘Dell Seneca noted Pozonsky and lawyers changed dates of proceedings without public notice and said he may not have cautioned lawyers about how their secret agreements could face public scrutiny.

“The whole thing is a little unusual,” O‘Dell Seneca told a lawyer. “… There wasn‘t at least complete transparency that occurred here. And if you have a presumption of openness in the court and all the activities that happen in it, this might raise some eyebrows.” The hearing was the latest in a case about one of the country‘s most famous gas drilling activists, Stephanie Hallowich, featured in local and national publications. Hallowich family members were not in court on Friday. They sent a letter saying they had no position on whether confidential court documents should be unsealed, O‘Dell Seneca said. Lawyers for one of the newspapers obtained a transcript from one hearing that was public; in the transcript, lawyers said the gas companies paid the Hallowiches $550,000.      >>>>>>><<<<<<<

 

Decision forthcoming on unsealing of court records

 

Jan 18, 2013 – The fate of sealed court records outlining a legal settlement between a Mt. Pleasant Township couple and a group of gas drilling companies is in the hands of Washington County President Judge Debbie O’Dell Seneca. The judge said Friday she will review arguments and previous court records before determining whether to unseal records of court proceedings involving Stephanie and Chris Hallowich and Range Resources, MarkWest Energy Partners and Williams Gas/Laurel Mountain Midstream.

The Observer-Reporter and the Pittsburgh Post-Gazette are seeking to have the records unsealed, contending the records contain pertinent information and should be open to public review. The oil companies want the records to remain sealed, claiming that an court order opening them would jeopardize all legal settlements containing a confidentiality clause.

How to avoid lease-related litigation
(also posted on a separate page: To Landowners: How to avoid lease-related litigation

David Ammons is a partner in Diamond McCarthy in Dallas and is board certified in oil, gas and mineral law by the Texas Board of Legal Specialization. He handles a wide range of complex litigation and bankruptcy matters, with a special emphasis on oil and gas disputes, director and officer liability, and business fraud actions.About ALM  |  About Law.com  |  Customer Support  |  Reprints  |  Privacy Policy  |  Terms & Conditions |  ALM User License Agreement

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